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July 19, 2011

Standard of integrated reporting in G20 needs improvement

Listed companies in the G20 region need to improve on meeting current integrated reporting good practice standards, according to the research commissioned by the International Integrated Reporting Committee (IIRC).

The IIRC research, examining 101 annual reports in the G20, found just under half (42%) of the listed company annual reports surveyed adhere to integrated reporting good practice standards.

The US is lagging behind most, with only19% of integrated reporting criteria being fulfilled with only 17% of reports presenting a link between the company’s sustainability strategy and group strategy.

The IIRC’s researchers, Black Sun, found that in the US, “due to the compliance driven approach to reporting, it is difficult for the companies to produce a ‘holistic’ view of the company and provide any detailed non-financial information.”

The study also found disappointing results in China and India, with only 36% of reports in China and 33% in India fulfilling integrated reporting criteria.

The report said that some of the companies in the India sample group have a US listing and are therefore more financially focused and adopt a more ‘rules’ based reporting regime, “with compliance firmly in mind rather than communication”.

In China most reports are said to be almost entirely financially focused and lack any insight into the market or their operations.

However, the study has found some encouraging results in countries like Brazil and South Korea where compliance is increasing.

According to the research the most compliant country in terms of sustainability reporting is South Africa where 73% of reports were meeting the integrated reporting criteria.

The high level of compliance in South Africa is linked to the King’s Code of Governance, which requires companies listed on the Johannesburg Stock Exchange to produce one integrated report instead of an annual financial report and separate sustainability report.

The G20 includes South Africa, Canada, Mexico, US, Argentina, Brazil. China, Japan, South Korea, India, Indonesia, Saudi Arabia, Russia, Turkey, European Union, France, Germany, Italy, UK and Australia.

 

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